South African business confidence pulled back in February after hitting a 2-1/2 year high in January as exports, imports and retail sales fell, but prudent economic policies could help boost sentiment going forward, a survey showed on Wednesday.

The South African Chamber of Commerce and Industry’s (Sacci) monthly business confidence index (BCI) fell to 98.9 in February from 99.7 in January – which was its highest since late 2015.

“The relative large negative monthly effects came from lower merchandise trade export and import volumes, and real retail sales,” Sacci said in a statement.

Business confidence was dented by policy uncertainty under the leadership of Jacob Zuma but economists say President Cyril Ramaphosa’s election as leader of the ruling African National Congress in December, and as president last month, has raised expectations that the country will make economic reforms.

“However, pivotal to a sustainable and inclusive economic growth performance over the longer-term is a substantial increase in fixed investment by local and foreign investors.”

In its budget at the end of February, the Treasury raised value-added tax for the first time in 25 years, part of efforts to cut the deficit and stabilise debt. Economic growth forecasts for the next three years were also raised.

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